Correlation Between RoboGroup TEK and Acuity Brands

Can any of the company-specific risk be diversified away by investing in both RoboGroup TEK and Acuity Brands at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RoboGroup TEK and Acuity Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RoboGroup TEK and Acuity Brands, you can compare the effects of market volatilities on RoboGroup TEK and Acuity Brands and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RoboGroup TEK with a short position of Acuity Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of RoboGroup TEK and Acuity Brands.

Diversification Opportunities for RoboGroup TEK and Acuity Brands

0.71

Correlation Coefficient

RoboGroup TEK  Acuity Brands

Poor diversification

The 3 months correlation between RoboGroup and Acuity is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding RoboGroup TEK and Acuity Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acuity Brands and RoboGroup TEK is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RoboGroup TEK are associated (or correlated) with Acuity Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acuity Brands has no effect on the direction of RoboGroup TEK i.e., RoboGroup TEK and Acuity Brands go up and down completely randomly.

Pair Corralation between RoboGroup TEK and Acuity Brands

If you would invest  30.00  in RoboGroup TEK on February 2, 2024 and sell it today you would earn a total of  0.00  from holding RoboGroup TEK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	4.55%
Values	Daily Returns

RoboGroup TEK  vs.  Acuity Brands

RoboGroup TEK

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days RoboGroup TEK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unfluctuating basic indicators, RoboGroup TEK reported solid returns over the last few months and may actually be approaching a breakup point.

Acuity Brands

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Acuity Brands are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Acuity Brands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with RoboGroup TEK and Acuity Brands

The main advantage of trading using opposite RoboGroup TEK and Acuity Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RoboGroup TEK position performs unexpectedly, Acuity Brands can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Acuity Brands will offset losses from the drop in Acuity Brands' long position.

The idea behind RoboGroup TEK and Acuity Brands pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.